JO CHUNG v. PACIFIC COMMERCIAL CO.
SC: Those who seek to avail themselves of the protection of laws permitting the
G.R. No. 19892 | September 6, 1923 | Malcolm, J.
Petitioner: TECK SEING AND CO., LTD. (partners SANTIAGO JO CHUNG, GO
TAYCO, YAP GUECO, JO YBE, LIM YOGSING)
Respondent: PACIFIC COMMERCIAL COMPANY, PINOL & COMPANY, RUI
HERMANOS, and W. H. ANDERSON & COMPANY
DOCTRINE: A strict compliance with the legal requirements for the formation of
limited partnership is not necessary. It is sufficient that there is substantial compliance
in good faith. If there is no substantial compliance, the partnership becomes a general
partnership as far as third persons are concerned, in which all the members are liable
as general partners.
FACTS:
In the insolvency proceedings of PET “Sociedad Mercantil, Teck Seing & Co., Ltd.,”
RESPs who are creditors of PET filed a motion with the Court with a prayer (a) to
declare the individual partners parties to the proceeding, (b) to require each partner to
file an inventory of their individual property, and (c) to adjudicate each partner as
insolvent debtors.
TC granted the motion but, upon opposition of PET, subsequently denied it.
 Hence this appeal.
PET’s counsel argue that Teck Seing & Co., Ltd. is not a corporation but a sociedad
en comandita or a limited partnership basing on the provisions of the articles of
partnership.
 RESP contend that the partnership contract established a general
partnership.
ISSUE/RATIO:
W/N the nature of PET mercantile establishment a limited partnership. - NO
SC: By process of elimination, it is self-evident that PET is not a corporation and
neither is it contended by any one that it is a cuenta en participacion (joint account
association).
The contract of partnership established a general partnership.
To establish a limited partnership, there must be, at least, one general partner and the
name of at least one of the general partners must appear in the firm name.
 ITC, neither of these requirements have been fulfilled.
 Hence, the contract created was not a limited partnership but a general
partnership even if “Ltd.” was used in the firm’s name to avoid liability
for possible losses.
creation of limited partnerships must show a substantially full compliance with such
laws. A limited partnership that has not complied with the law of its creation is not
considered a limited partnership at all, but a general partnership in which all the
members are liable.
 The legal intention deducible from the acts of the parties controls in
determining the existence of a partnership. If they clearly intended to do a
thing which in law constitutes a partnership, they are partners although their
very purpose was to avoid the creation of such relation (Professor Jose A.
Espiritu, amicus curiæ)
 ITC, the intention of the persons who created the PET mercantile
establishment was to establish partnership which they erroneously
denominated as a limited partnership.
 If their purpose was to form partnership, all subterfuges resorted to in
order to evade liability for possible losses, while assuming their
enjoyment of the advantages to be derived from the relation, must be
disregarded.
◦ The partners who have disguised their identity under a designation
distinct from that of any of the members of the rm should be penalized,
and not the creditors who presumably have dealt with the partnership in
good faith.
SC: Article 125 of the Code of Commerce provides that the articles of general
partnership must state the names, surnames, and domiciles of the partners; the firm
name; the names, and surnames of the partners to whom the management of the firm
and the use of its signature is enstrusted; the capital; the duration of the
copartnership; and the amounts which, in a proper case, are to be given to each
managing partner annually for his private expenses. Article 126 provides that the
general partnership must transact business under the name of all its members, of
several of them, or of one only.
 The one object of the act is manifestly to protect the public against
imposition and fraud, prohibiting persons from concealing their identity by
doing business under an assumed name, making it unlawful to use other
than their real names in transacting business without a public record of who
they are.
 ITC, all the requirements of the Code have been met with the sole
exception of that relating to the composition of the firm name.
SC: Articles 127 and 237 make all the members of the general partnership liable
personally and in solidum with all their property for the results of the
transactions made in the name and for the account of the partnership.
 Section 51 of the Insolvency Law, likewise, makes all the property of the
partnership and also all the separate property of each of the partners liable.
In other words, if a firm be insolvent, but one or more partners thereof are
solvent, the creditors may proceed both against the rm and against the
 solvent partner or partners, first exhausting the assets of the rm before
seizing the property of the partners.
RULING:
WHEREFORE, the order appealed from is REVERSED, and the record shall be
returned to the court of origin for further proceedings pursuant to the motion
presented by the creditors, in conformity with the provision of the Insolvency Law.
Without special finding as to the costs in this instance, it is so ORDERED.
NOTE:
English translation of Spanish document: "LIMITED MERCANTILE COMPANY
SCRIPTURE"
"Know all for the present:
"That we, Santiago Jo Chung Cang, of legal age, Trader, neighbor and resident of the
municipality of Tabogon, Province of Cebu, Philippines, Go Tayco, of legal age,
Merchant, neighbor and resident of the municipality of Cebu, Province Of Cebu,
Philippine Islands, Yap Gueco, of legal age, trader, Neighbor and resident of the
municipality and Province of Cebu, Islas Philippines, Lim Yogsing, of legal age, trader,
neighbor and Resident of the municipality of Cebu, Province of Cebu, Islands
Philippines, and Jo Ybec, of legal age, trader, Resident of the municipality of Jagna,
Province of Bohol, Islands Philippines, we hereby state that we constitute and We
form a limited trading company, under the laws in force In the Philippines, and to be
registered in accordance with the Regulations of the Commercial Code in the
Philippines.
"That the business name shall be named" Teck Seing & Co., Ltd. "and will have its
main address at Calle Magallanes No. 94, of the City of Cebu, Province of Cebu,
Philippine Islands.
"That the social capital will be thirty thousand pesos (P30,000) Currency of the
Philippine Islands, divided into five shares of P6,000 each by Santiago Jo Chung
Cang, Go Tayco, Yap Gueco, Jo Ybe, Lim Yogsing.
"That the duration of the partnership shall be six years, from The date of this deed,
and this time may be extended to Unanimous discretion of all shareholders.
"The object of the partnership will be the purchase and sale of goods in general.
"The administrator or administrators of the company may, With prior agreement of the
shareholders, establish how many Branches or establishments deemed necessary to
facilitate Their business and the greater development of the trade in which the Society,
verifying all the operations they create Suitable for the promotion of its capital.
"The profits or losses that result during each year Shall be distributed proportionally
among the shareholders, According to the capital contributed by each one of them.
"The profits that will result in each commercial year, if Result in some gains, they can
not be withdrawn by the Shareholders within a period of three years from the date of
Date of the first annual balance of the business, leaving therefore Reserves in order
to increase the capital contributed by The shareholders and thus expand the sphere
of action undertaken by the same company. To the The three-year term expires, each
shareholder may Withdraw or deposit in the hands of the company, the profits Should
correspond during that three-year term.
"That shareholders may not extract or dispose in any Time any quantity or quantities
of the company, which Has been contributed by them, to meet their expenses Not
even paying any income on the amount Attempt to dispose of or extract from that
company.
"The shareholder Mr. Lim Yogsing will be in charge, in union of the Mr. Vicente Jocson
Jo, the Company's management, who May use the social signature indistinctly, being
for Consequently authorized both to do on her behalf All kinds of business operations,
business speculations, Practicing judicially and extrajudicially how many acts For the
good of society, appoint attorneys-in-fact or Lawyers for claims and collection of
credits and to propose Exceptions. In case of absence, illness or Any other
impediment of shareholder Mr. Lim Yogsing, it may confer general or special power to
the shareholder Which creates convenient for which in union of the administrator
Assistant to Mr. Vicente Jocson Jo, could both administer Conveniently the business
of the company. That the Administrators may have the necessary employees for the
Management of the company's businesses, and will determine the That these
employees should receive for services rendered to the society.
"That both administrators may have one thousand two hundred Pesos (P1,200)
Philippine currency, annually, for your expenses Particular, said quantity of P1,200
being that corresponding to To each of said administrators, as emoluments Wages
that are assigned to each, For his work in the administration of society. It being
understood that, shareholders may dispose of each purpose Year the bonus to be
granted to each manager, if the Businesses of the year were buoyant and justified the
granting of a Special bonus, apart from the salary set forth here and specified.
"That passed the term of six years, and is of the convenience of The shareholders
continued the business of this company, Term will be extended for an equal number of
years, without Of the granting of further deeds, leaving the present in Force until the
term established by all shareholders.
"That any differences that may arise between Shareholders, either for the reason
stipulated in this deed, Already by acts in the course and direction of the businesses
in her Will be arranged to arrange between the same friendly and Extrajudicially, and
if an arrangement is not achieved in this way, Such shareholders shall appoint an
arbitrator whose resolution is All bound and hereby undertake and undertake to
Accept it in all its parts, renouncing further resources. "In what terms do we make this
deed of Company, and we promise to keep it faithfully and Strictly according to the
pacts we have established.
"In testimony of all of which, we signed in the City of Cebu, Province of Cebu,
Philippine Islands, today, October 31, thousand Nine hundred and ten.
"In the Municipality of Cebu, of the aforementioned Province, I. F., Today, October 31,
1919, A. D., before me, a Notary Public who Subscribe, personally appeared
Santiago Jo Chung Cang, Go Tayco, Yap Gueco, Lim Yogsing and Jo Ybec,
represented The latter by Ho Seng Sian, as authorized in Telegram dated September
27, 1919 that I have been Presented at the same event, of whom I give the assurance
I know for being the same people who gave the preinsert Document, ratifying before
me its content and stating that it is the Itself an act of his free and voluntary bestowal.
Mr. Santiago Jo Chung Cang showed me his personal certificate issued In Cebu,
Cebu, I.F. on September 19, 1919 under No. H77742, Go Tayco also showed me his
issued in Cebu, Cebu, I.F., on October 9, 1919 under No. G2042490, Yap Gueco also
showed me his one issued in Cebu, Cebu, I.F. On January 20, 1919 under No.
F1452296, Lim Yogsing. I also exhibited his own issued in Cebu, Cebu, I.F., the day
February 26, 1919 under No. F1455662, and Ho Seng Sian Representative of Jo
Ybec, showed me his personal certificate issued In Cebu, Cebu, I. F. on February 4,
1919 under No. F1453733.
"In front of me, (Signed)
"F. V. ARIAS
"Public notary
"Until January 1, 1920 "Seat No. 157
Page 95 of my Notary Registration